IMAX is a stock you should own in 2025: Roth

The content is coming and that’s one of the reasons you should own IMAX (IMAX Stock Quote, Chart, News, Analysts, Financials NYSE:IMAX).

So says Roth analyst Eric Handler, who in a research update to clients entitled “IMAX: Multiple Levers To Drive Growth In 2025”, named the stock his top small cap idea.

“The start of a strong 2+ year content cycle is at hand, in our view. Plus, we look for IMAX to further benefit from an expanding global footprint and a larger market share,” Handler argued. “Greater operational scale should also help drive EBITDA margin expansion. We see IMAX shares as inexpensive, at <9x our 2025E EBITDA, and trading at a sizable discount to its 11x-16x pre-pandemic multiple range." In a research update to clients January 22, the analyst reiterated his "Buy" rating and raised his price target on the stock from $28.00 to $30.00. Handler thinks IMAX will post EBITDA of $142.2-million on revenue of $360.8-million in fiscal 2024. He expects EBITDA of $174.7-million on revenue of $422.0-million in fiscal 2025. The analyst says the outlook for 2025 is solid. "We continue to forecast a record $1.160bn (+29%) GBO for IMAX in 2025," he wrote. "Two of the most important drivers in our model are: (1) a $165mn GBO for Avatar: Fire and Ash; and (2) a $300mn+ box office in China. More Filmed For IMAX (FFI) movies should also fuel market share gains and aid growth. Our outlook for Avatar: Fire and Ice assumes a similar per screen average as Avatar: The Way of Water of $89k and a projected screen count of 1,860 screens, up from 1,716 in 4Q22. For China, a $300mn+ box office would represent 26% y/y growth in the market, which is still below peak levels from 2018 and 2019 of $337mn and $366mn, respectively." Handler says there are at least a handful of Hollywood movies that should prove to be China-friendly in 2025, including Mission: Impossible - The Final Reckoning, F1, Zootopia 2, and Avatar: Fire and Ash.